Dry bulk reaches 2010 highs, but future remains uncertain

Last week saw dry bulk market creating some sort of a milestone, as the Baltic Dry Index has propelled itself at never before seen levels for 2010. Mid-week, the BDI edged up even higher at 4,209 (+ 22 points on a daily basis), with the Capesize market segment once again leading the pack, as all other ship types demonstrated deflationary trends.

After an impressive increase during the beginning of the week the market set for correction. For many it suggested that the charterers have tested their strength and were not willing to push the market any further.

In its weekly report, Fearnley's said that capesize rates went through the roof... Although some talks about the market appearing more toppish now - nobody dares to say we are presently on the top."

Jeffrey Landsberg of Commodore Research said last week that he remains cautious for what is in store for the future and there is valid concern that freight rates may come under great pressure in the second half of the year.

"With that in mind, though, we continue to take things one step at a time, as there will continue to be opportunities to benefit from changes in short-term market dynamics, as we have seen in the dry bulk equity, FFA, and physical markets in the last few weeks".